Types of Private Ownership

An Overview : Target audience - S.4 Economics Students Uses of the program - lecturing assistance Approximate length - ONE lesson Supplements - textbook, notes

Introduction Threre are THREE common forms of private enterprises. They are : Sole Proprietorship Partnership Limited Company

Sole Proprietorship Meaning Features Advantages Disadvantages

Sole Proprietorship Meaning It is a firm with only ONE owner

Sole Proprietorship Features 1. No separate legal status 2. Unlimited liability 3. Lack of continuity 4. Freedom of transfer of business 5. Simple to set up

Sole Proprietorship Advantages 1. Strong incentive 2. Prompt decision making 3. Close relationship with employees 4. Close contact with customers 5. Simple to set up 6. Lower profit tax rate in H.K.

Sole Proprietorship Disadvantages 1. Unlimited liabilities 2. Limited capital for expansion 3. Excessive responsibility 4. Lack of continuity

Partnership Meaning Features Advantages Disadvantages Types

Partnership Meaning A relationship between persons carrying on a business for profit.

Partnership Types 1. General Partnership 2. Limited Partnership Their main differences are some partners in limited partnership are “limited partners”. They enjoy limited liabilities.

Partnership Features 1. Limit of partners 2. No separate legal identity 3. Unlimited liabilities 4. Act by one binds all others 5. Regulations on admission/withdrawal of partners 6. Lack of continuity

Partnership Advantages 1. Wider sources of capital 2. Wider scope of specialization 3. Cost and risk sharing 4. Simple to set up 5. Lower profit tax rate in H.K.

Partnership Disadvantages 1. One partners errs, all partners suffer 2. Possible delay in making decision 3. Inflexible organization 4. Lack of continuity

Limited Company Types Features Advantages Disadvantages

Limited Company Types 1. Private limited company 2. Public limited company Let’s see their difference !

Private Vs Public Limited Company PrivatePublic No. of shareholder Transfer of shares Public trading of shares Disclosure of accounts  Not freelyFreely Not allowedAllowed Not to publicTo public

Limited Company Features 1. Owners are shareholders 2. Independent legal identity 3. Limited liability 4. Lasting continuity 5. Possible separation of ownership & management

Limited Company Advantages 1. Limited liability 2. Widest source of capital 3. Lasting continuity 4. Higher efficiency in management 5. Shares easily transferable

Limited Company Disadvantages 1. Longer time in making decision 2. More costly to maintain morale 3. Lower incentive 4. More complicated to set up 5. Higher profit tax rate in H.K.

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